Daily Close | Forex, Metals, Oil, Agriculture December 16, 2020



News that Egypt paid its highest price in five years for Romanian and Ukrainian Wheat was also bullish.


A further extension of these facilities will help sustain recent improvements in global U.S. dollar funding markets by serving as an important liquidity backstop. Today, I will focus on what I consider to be gold’s two biggest competitors for investment funds, and they are the mighty dollar and the S&P 500. This stock came to our attention from a screen we ran, where we were looking for cheap companies both from a dollar standpoint (price) and from a valuation standpoint.
Atento trades in the US and has US dollar denominated debt and so can be affected by currency fluctuations, particularly declines of the Brazilian real. When local currencies decline, Atento’s revenues decline in US dollar terms. Netflix raised its monthly rates by a dollar to increase profits. Will the dollar will continue to fall in 2021? The first question: How do you define dollar hedging? At the earlier date the U. S. Dollar Index (DXY) was just under 103.00. The Brazilian real to USD ratio started the year at just over 4 and moved to over 5.8 in the spring.
If you’re inclined to agree, diversifying into non-dollar-denominated assets looks appealing. In particular, the Brazilian Real has been strengthening and Atento has been reporting improved EBITDA. For example, it now takes almost $1.2200 to buy one Euro. Accordingly, this tracking strategy offers a real-time measure of how non-dollar investing is trending. On March 20, 2020, it took only $1.0667 to purchase a Euro.


When gold keeps establishing new highs, then it’s a key indicator of gold’s ongoing strength. The demand for gold is growing as investors allocate some of their funds to gold ETFs which are easy to access and exit and are gaining in popularity. As such, copper’s sustained outperformance vs. the safe haven gold suggests a global economic recovery is underway, leading to a cyclical rally in broader stock market. One of the hallmarks of a secular gold bull market is its performance in all currencies.
However, gold remains in its early days of a solid, multi-year bull market. When this gold bull charges, it will reach a fever pitch where rational thinking leaves the room and obsessive behavior takes over. By now gold has worked off most of the excess bullish sentiment its market had built up. We see this as a major support level for gold from which it can springboard and resume its rally to a future all-time high. As the old adage goes, there is no fever like a gold fever, and it is coming soon.
Owning gold and cryptocurrencies – alternative forms of “money” untethered to the greenback – have been a profitable trades this year too. I know it may not feel that way for some right now, with gold correcting and consolidating since early August. Although they are smaller in volume, they still hold hundreds of tonnes of gold for investors. Here’s a look at gold’s performance in the world’s most commonly used currencies for perspective. To conclude, the breakout in copper/gold ratio and relative value to bonds suggest the bull run in S&P 500 and broader stock market has a long way to go.
When gold retreated, those who saw some or all of their gains evaporate, and lacked conviction, became sellers. Gold’s huge 38% gain between March and August was exciting, but not entirely sustainable. Expecting gold to rise in a straight line is simply unrealistic. Gold is almost perched on its 200dma, which stands at $1,814/Oz. gold-prices.biz makes no guarantee or warranty on the accuracy or completeness of the data provided.


WTI oil prices will rise 145% YoY in April and Brent oil prices will rise by 86% assuming prices as today’s levels. Investors in oil companies have been burned, with 100’s of North American Oil Exploration & Production companies going bankrupt in the past five years. This wouldn’t be an issue if we could just use existing oil wells to maintain the current level of supply, but unfortunately that’s not how the oil industry works. However, investors should realize that natural gas is a much more environmentally-friendly fuel than oil and hence it is immune to the aforementioned shift in the energy market.
The pandemic has severely hurt the oil market but it has hardly affected the natural gas market and hence the business of Kinder Morgan.
This transition away from oil is likely to happen even slower for other petroleum products where there is less investment in oil alternatives (ex. A recent Federal Reserve study found for every 10% increase in oil prices, the U.S. experiences a .7% increase in overall prices (CPI). The environmental policies of most countries aim to reduce the consumption of oil but there is no policy that aims to reduce the consumption of natural gas.
Oil prices go up when the market is worried about the potential for supply to not meet future demand. Exxon has recently come under criticism over its strategy to continue to increase oil output despite many rival companies switching to more environmentally modes of energy production. Crude Value Insights offers you an investing service and community focused on oil and natural gas. The one’s that survived rewarded investors with consistent negative returns on capital due to oil prices falling by ~50% over this period.
Despite the obvious demand for oil in the years to come, the recent shortfall of investment is understandable. Shale technology allows for a greater percentage of a well’s production potential to be captured in the first couple years compared to traditional oil wells. This is a seismic shift for a company whose core business is the production of oil and gas. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation.
NFIB survey hints of increasing price pressures during 2021 Base effects from commodities, and oil prices in particular, will send inflation skywards during the spring. This price range for oil likely means higher inflation than we’ve seen at any point in the past 20 years. Oil prices have been steadily climbing over the past couple months, despite the increases in Covid cases and associated lockdowns.
On the contrary, the global demand for oil products is expected to decrease 8.7% this year, from 101.2 to 92.4 million barrels per day.

United States

The Fed is not priced to do anything during 2021-2023, which may be true, but the risk picture remains tilted towards higher rates, in our view. Employment will likely continue to recover, even with the Fed taking a proactive approach to preventing excess inflation and asset bubbles. However, with the Fed aggressively pushing down on interest rates, the normal price setting activity in the bond market is being thwarted. The report suggests that the 4.1% annualized growth in fourth-quarter gross domestic product that economists polled by The Wall Street Journal forecast earlier this month may be too high.
The market is priced for zero Fed Funds activity over the coming years, which may be too defensive.
Mortgage rates continue to hit new lows as a result of current Fed policy. If we look six months into the future, my view is consumer price inflation will be well above Fed targets. Based on Fed communications to date, it seems highly unlikely the Fed will raise rates in the next six months. Fed Chair Powell’s comment in June that “…we’re not even thinking about thinking about raising rates…” underscores that low rates are here to stay.
The market is currently pricing in a 0% chance that rates will rise through the June Fed meeting. Several of our models hint of >2% PCE core price prints during the spring of 2021, which will likely lead the markets to test the Fed AIT regime. The latent curve steepener pressure is already visible and once the Fed allows the curve to “live its own life” we expect a marked steepening pressure. Fed Chairman Jerome Powell has pledged to keep rates at lower levels until the end of 2023.
Purchases on the Fed’s balance sheet will include $80 billion of Treasury securities and $40 billion of mortgage-backed securities. Stock prices tend to rise, if given a long-enough period of time, and the tech-rich Nasdaq has climbed particularly fast since the Great Recession. Investments over the long term should pay off.Secoo Holding Limited (NASDAQ:SECO) operates in the internet retail space in China. 3 this year, following T-Mobile’s (NASDAQ:TMUS) acquisition of Sprint Corp. AT&T’s pay-TV losses have far outpaced declines at rivals like Comcast (NASDAQ:CMCSA) and Dish Network (NASDAQ:DISH).
“We still have opportunities to do some things around rejiggering our portfolio,” Stankey was cited as saying at a UBS Group investor conference last week. The stock of ContextLogic Inc. opened at $22.75 on Nasdaq, below its IPO price of $24 and placing the company’s value at about $16.2 billion. The Fed should raise rates, as the vaccine gets rolled out, to achieve this objective.


Aphria already has a strong German footprint with CC Pharma, while Tilray has a large EU-GMP certified cultivation facility in Portugal.